1 Wall Street analyst thinks Nvidia stock price will hit $160. Is this a purchase for around $130?
One analyst’s new price target for Nvidia is the highest on Wall Street for the chipmaker, valuing it at nearly $4 trillion.
One of the biggest debates among Wall Street followers recently has been how far away it is. nvidia (NVDA 3.51%) Inventory may run out. A new report from one analyst leads the charge on how high the stock could go.
Susquehanna senior semiconductor analyst Chris Rolland raised his price target for the company from $145 per share to $160. This represents a market capitalization of $3.94 trillion, an increase of more than 20% from recent levels. The question for investors is how bold Nvidia’s prospects seem.
All About Software
Nvidia stock has soared nearly 600% since January 2023 thanks to insatiable demand for graphics processing units (GPUs). Customers can’t get enough of the industry-leading processors they need to meet the massive computing performance requirements of artificial intelligence (AI) applications. Nvidia is already producing the next generation of chips and plans to release new versions every year going forward.
Nvidia also plans to integrate its software to provide customers with more end-to-end solutions for data center servers. Rolland believes software will be a key factor in pushing Nvidia’s stock price up to his high estimate.
Nvidia’s Compute Unified Device Architecture (CUDA) toolkit allows users to develop, enhance, and deploy applications on a variety of types of GPU-accelerated embedded systems. Rolland said that CUDA “that much Currently, it is an operating system for large-scale language model processing and/or training.”
Aggressive Investment Math
It makes sense to focus on software and other products beyond GPUs as potential drivers of Nvidia’s future profits. Although demand will eventually outstrip chip supply, production capacity remains a limit to the revenue Nvidia can generate from its hardware. Market share is also likely to erode to a trickle due to competition.
However, Rolland’s valuation still appears to be somewhat aggressive. He based this target on the stock valuing itself at a multiple of 51.5 times its 2025 adjusted earnings-per-share forecast. I have no doubt that Nvidia will continue to grow its sales and earnings. But while it’s a stock worth owning for the long term, it may not be worth it until next year at the earliest.
